The recent increase in financial standing requirements for the Transport industry is damaging and prevents growth in the sector.
Since January 1st there was a 30% increase in the amount of money that transport companies with standard operators licences have to have immediately available. For the first vehicle on a licence the amount increased from £6200 to £8,100 and then for each subsequent vehicle the amount increased from £3,400 to £4,500.
This means that for a small three-vehicle operation the operator must show they have immediate access to £17,100 as opposed to £13,000. Many small businesses don't enjoy that kind of cash flow. It means that businesses are reluctant or unable to increase the size of their fleet due to the additional finances that they have to demonstrate. To do so means approaching the bank to increase their overdraft facility, which banks are reluctant to do, or get either a bank loan or directors loan.
The increase is stunting growth in the industry sector.
It is also unnecessary as realistically this amount of cash outlay is not required to keep a fleet of vehicles safe and roadworthy.
The financial standing requirements are standardised by Europe, fixed in Euros and converted into Sterling. The levels are reviewed every five years and were increased this year due to the poor performance of the pound against the Euro. This places UK hauliers at a disadvantage to their European counterparts. This is in addition to the higher fuel prices in the UK that our hauliers also have to contend with.
By road transport solicitor, Sean Joyce